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Wall Street Managers Are Cool to Hot Java

By Deborah Weil
Contributing Editor, The Internet Letter
September, 1995


Sun Microsystem's Inc.'s HotJava is being promoted as the next killer application for Wall Street Investors. "We've gotten tons of interest from the major brokerage firms," said Kim Polese, HotJava product manager in Sun's Mountain View, CA headquarters. "It's the hottest thing in software development on Wall Street."

But the Street is not racing to adopt this cutting-edge technology. So far, the Street is unimpressed with the World Wide Web browser's multimedia capabilities and its ability to execute real-time financial transactions across the Internet.

"What would be the draw of executing trades on the Internet?" said Paul Dravis, technology analyst and vice president of J.P. Morgan Securities, Inc.

"Professional traders already have computer technology at their disposal which is more than adequate," said Charles Ardai, vice president of D.E. Shaw & Co.

"I don't think someone who does program trading would rely on the Internet at this time," said Richard Griffin, senior vice president of Chicago-based Howe Barnes Investments, citing lack of comfort with the Internet's stability and security.

Nonetheless, Sun is extolling the potential of HotJava as a tool for real-time stock portfolio management. And Netscape has signed an agreement with Sun to incorporate Java's programming capabilities and security features into an upcoming release of its widely-used Web browser.

Released in May, the HotJava browser is written in a new programming language dubbed Java. The new language makes it possible to embed software programs in a Web page, much as graphic files are included in an HTML page. By contrast, other Web browsers must call up internal applications stored on the enduser's machine in order to run software programs.

Web pages viewed through the HotJava browser can execute "applets" or programs written in Java. The applets are intended to "caffeinate" otherwise static Web pages, adding interactive, real-time and 3-D multimedia features currently absent from most Web sites.

"The possibilities are nearly limitless," according to Eric Schmidt, chief technical officer at Sun.

HotJava thus operates simultaneously as both a Web navigator and a powerful application tool.

Programmers and systems engineers may be excited, but the buzz on HotJava hasn't reached the Street's front offices.

"From Silicon Valley's perspective it's a very cool technology. It has an incredible amount of potential," said J.P. Morgan's Paul Dravis. "But I don't know anybody who's jumping into development with it... Most people are still clueless as to the potential of the Internet and the Web."

"I don't hear a buzz in management circles," said Ardai of D.E. Shaw, known as one of the Street's most Internet-savvy firms. "I would need to be convinced" that HotJava offers the full-service brokerage houses more than the technology they have access to.

Still, he adds, "There is value to be found on the Internet, but not for traders during the trading day. It's a terrific research tool."

Others agree, pointing out that the Internet offers potential for global access to foreign markets and for better communications between brokers and clients. At least half a dozen of the biggest full-service and discount brokerages have put up Web pages in the past few months.

"I think the Internet has a very big future in the financial services industry if it offers a more seamless method of communication between parties to a transaction," said Griffin of Howe Barnes, a retail discount brokerage firm. He predicts that "a substantial portion of the transactions between discount brokers and their customers will eventually move over the Internet."

Griffin in January put up a home page for The Net Investor, a cyberspace branch office for Howe Barnes inviting potential clients to "take a seat on the exchange."

The site offers individual investors real-time stock quotes, financial information and on-line ordering. However, orders are transmitted for execution through a proprietary network, not directly through the Internet.

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